Ecocentricity Blog: Alex, I’ll Take Economic Systems for $800
Capitalism is fundamentally a more efficient system than communism. By empowering private citizens to seek their own self-interest, the system becomes decentralized, making it more locally attuned to market demands and shifting conditions.
When it comes down to it, free markets are simple. They are the end result of capitalism, the economic system (i.e. a system in which goods and services are produced and exchanged) in which the process of creating goods and services is privately managed for the purpose of generating a profit.
Okay, fine, maybe that isn’t so simple. But I can break this down a bit, starting with a comparison to another well-known economic system: communism.
While communism is also a political and social ideology, as an economic concept, it relies upon public ownership of the systems of production with the goal of economic uniformity amongst citizenry. In other words, the government runs the businesses and no one is supposed to be “better off” than anyone else. With capitalism, private citizens run the businesses, and the whole point is for those who are best at doing so to be rewarded with private wealth. The two systems couldn’t be more different.